European Gas "Storage trajectory in focus" Kim

Research evidence excerpt

European Gas "Storage trajectory in focus" Kim

eria combined covering another 30% (Figure 17OfsetingGulfLNGflows(bcm)). Taken Analyst

anna.kishmariya@ubs.comtogether with softer demand, the market has absorbed a meaningful share of the supply

+44-20-7568 7999

loss. We would expect the remaining supply gap to widen if summer buying picks up,

due to limited new project additions and supply upside over the season. Mark Freshney

Analyst

mark.freshney@ubs.comInjection pace softens; 78% full ahead of next winter

+44-20-7568 3989

EU storage stands at 37% as of 20 May, 9% below last year and 14% lower than the

Wanda Serwinowska, CFAseasonal average. Slower LNG imports are feeding through to the pace of injection. May

MtD cumulative net injections stand at 4.2bcm, 25% below both last year's and the

wanda.serwinowska@ubs.com

seasonal average. The most recent week was even weaker at 1.2bcm, vs. 1.8bcm last +44-20-7568 3980

year and roughly half the norm, raising concerns regarding the storage trajectory. Our

base case now shows EU storage reaching 78% full by end-October, 200bps lower than

previously. This compares with 71% full implied by the average injection pace observed

since 1 April, well below the lowest levels of 77% recorded over the past decade, as the

cumulative injections have been around 30% below the seasonally required pace.

European piped gas imports down 1%; limited upside

Europe's piped gas imports fell slightly by 1% y/y to 14bcm in April. Norwegian imports

were down 4% y/y due to seasonal maintenance, while higher imports from Algeria

(+10% y/y) and Russia (+12%) partly offset the decline. We expect European piped gas

imports to rise by ~3% this year, though pipeline capacity and upstream constraints may

limit further gains.